I AM BORED AND I HAVE A DOLLAR

Posted in Quick Hits on August 14th, 2008 by Ed

These two facts are enough to make one a homeowner in Detroit. If that link isn't depressing enough, try doing a ctrl-f search for the phrase "fire damaged." Or I will save you the trouble: that phrase appears a lot. Thanks, Mike.

Images of that episode of The Simpsons in which Bart buys a factory for a buck come to mind.

I DON'T KNOW WHO HE IS, BUT I HATE HIM

Posted in Rants on August 14th, 2008 by Ed

There's nothing more depressing than a person who is absolutely consumed by loathing for something they don't bother (or aren't able) to understand. We're good at this in America. Next time you hear someone go off on a 20-minute rant about (taxes, Muslims, No Child Left Behind, oil prices, whatever) ask them an incredibly basic question and watch the ensuing trainwreck. Information is entirely optional in acting out our irrational hatreds.

To full time Tax Bitchers, for example, the idea of high marginal tax rates creating a "disincentive to earn more" is a staple argument. Using hypothetical figures for simplicity, if the split between the second-highest tax bracket (say 30%) and the highest (35%) was at $150,000, individuals earning near that amount would have a disincentive to earn more. Seventy percent of $145,000 is larger than 65% of $155,000 ($101,500 > $100,750). It make sense, right?

That works for those in the reality-making world, but for the rest of us the facts get in the way. Progressive tax brackets are not applied retroactively. That is, when you hit $150,000 the new bracket applies only to incoome earned beyond that point. So there's never a "disincentive" in the (reality-based) definition of the term – you know, something that penalizes or otherwise discourages behavior. What progressive tax brackets provide are slightly less incentive. Less incentive (i.e., keeping 65 cents of each additional dollar rather than 70) is not the same as disincentive.

Ten million bonus points to Professor Hack (at U. Michigan…Flint!) for butchering the Laffer Curve. Sure, the top 10% of all income earners paid 50% more in taxes under Reagan, which is really impressive if you don't also mention that those same individuals more than doubled their incomes over the same time period (compared to a 13% increase for the bottom 90%).